Opinion
No. 33253
Decided May 6, 1953.
Taxation — Sales tax — Assessment against vendor — Tax Commissioner may reaudit and impose corrected assessment, when — Time within which redetermination may be made — Section 5546-9d, General Code.
APPEAL from the Board of Tax Appeals.
In 1949, a sales tax assessment plus penalty, in the total sum of $2,350.20, was made against the vendor, appellant herein, for the period from July 1, 1945, to June 30, 1949. Subsequently, a hearing was had before a departmental hearing board on a petition for reassessment and the assessment plus penalty was reduced to $66, on the representation that the appellant's business prior to 1948 was a grocery and meat business rather than a restaurant and tavern operation. This amount was paid by appellant.
Thereafter, the Tax Commissioner ordered a reconsideration of the appellant's accounts for the reason "that the vendor did not make a full disclosure" on the hearing for reassessment. On October 11, 1951, a new assessment was levied against appellant for the same business and the same period of time, in the amount plus penalty of $1,724.32, on the theory that appellant had, throughout the audit period, been in the restaurant and tavern business. The records of appellant's business prior to 1948 were not available, but gross sales were determined from federal income tax returns. Records of appellant's business subsequent to 1948 were available.
Appellant again filed a petition for reassessment requesting that the latter assessment be dismissed in view of the fact that the former assessment of $66 had been paid. Appellant offered no evidence that taxable sales were different from those found by the examiner. On February 21, 1952, this request was denied, and the assessment of October 11, 1951, was ordered to stand as issued.
On appeal to the Board of Tax Appeals, the Tax Commissioner's order of February 21, 1952, was affirmed.
An appeal from the decision of the Board of Tax Appeals brings the cause to this court for review.
Mr. Alvin M. Spero and Mr. Joseph Nahra, for appellant. Mr. C. William O'Neill, attorney general, Mr. Everett H. Kreuger, Jr., and Mr. Paul Tague, Jr., for appellee.
Two questions are presented. One is whether the Tax Commissioner, in 1951, was precluded from redetermining the sales tax liability for the entire audit period from July 1, 1945, to June 30, 1949, by the provision of Section 5546-9 d, General Code, prescribing a four-year limitation for making sales tax assessments, excepting "(1) when the Tax Commissioner has substantial evidence of amounts of taxes collected by a vendor from consumers on retail sales which were not returned to the state either by means of cancelling prepaid tax receipts or by direct remittance, or (2) when the vendor assessed failed to file a return as required by Section 5546-12 b of the General Code."
As to the first exception, evidence of gross sales may be evidence of taxable sales, but it is not necessarily "substantial evidence" of the amount of taxes collected. If evidence of gross sales were always regarded as "substantial evidence" of the amount of taxes collected, the limitation provision of the statute would be meaningless.
As to the second exception, failure "to file a return," means failure to file any return, not an accurate or perfect return.
The Board of Tax Appeals concluded that the time limitation provided by the statute was inapplicable under the facts of the case because "fraud had been practiced" on the Tax Commissioner by nondisclosure on the part of appellant. Such conclusion was erroneous and the board's decision in this respect, being unreasonable and unlawful, is reversed. That section precluded the commissioner from imposing an assessment covering the period prior to the four-year period therein prescribed, the case not falling within the purview of either exception named in the statute. Daiquiri Club, Inc., v. Peck, Tax Commr., ante, 52.
The other question presented is whether the appellant's payment of the assessment of $66, fixed by the Tax Commissioner after hearing on a petition for reassessment, deprived the commissioner of power and authority to make a second reassessment covering the same business in the same location and for the same period of time. This question was answered in the negative by the Board of Tax Appeals. Its decision in this respect, limited, however, by the four-year period above referred to, is affirmed. Daiquiri Club, Inc., v. Peck, Tax Commr., supra.
The decision of the Board of Tax Appeals is affirmed in part and reversed in part and the cause remanded.
Judgment accordingly.
WEYGANDT, C.J., MIDDLETON, TAFT, MATTHIAS, HART, ZIMMERMAN and STEWART, JJ., concur.